GBP/USD Weekly Forecast: Bears Lack Steam Below 1.39 Despite Upbeat NFP

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• Despite the good news related to the US labor indexes, the GBP/USD pair remained at the same level the whole week.
• Next week will be very important in terms of US inflation expectations.
• Great Britain maintains the advantage of a decrease in infections of the Delta variant.
• For the next week, a rise is expected to keep the price around the 1.3900 level.

The GBP/USD weekly forecast has resisted statements by Fed officials, strong US labor results, and BOE caution to stay at the 1.3872 level. Instead, the pair has shown surprising strength, and investors still wait for the reaction to the upcoming events of the following week.

The main focus will be US inflation data and the number of infections with the Delta variant of COVID-19. On the latter issue, Britain gets the upper hand due to a declining number of infections and a higher immunization rate.

Regarding the behavior of the main monetary entities of each country, the BOE remains cautious by refusing to announce changes in its monetary policy. Meanwhile, the Fed made a surprise turn by making aggressive announcements through its vice president Richard Clarida, who assured that the FOMC is taking steps to pave the way for higher interest rates. Although there was an initial downtrend, it did not last long and the price quickly returned to its average levels for the week.

The US dollar benefited from the Fed’s announcements that it would reduce its bond purchase of 120,000 billion per month, in addition to the performance of the country in reducing unemployment rates. For its part, the British pound strengthened from an update of the Markit Service Purchasing Managers Index for July, and it maintains a significant advantage over the dollar concerning the Delta variant.

Upcoming Events

The United States will release three indexes of great importance. First, regarding the Consumer Price Index (CPI), economists are still not sure if inflation has already reached its peak, which is why this month’s publication could affect the price of the dollar. The core Consumer Price Index is expected to increase 0.5 % from 0.9%.

Finally, on Thursday, the Producer Price Index (PPI) will be released. It is expected to increase by 0.6%. If successful, the Fed’s intention to begin phasing out would be reinforced.

GBP/USD Weekly Technical Analysis: 200-Day SMA to Support

The GBP/USD pair has barely managed to turn into an uptrend that has triggered a dip below the 50-day SMA. During the week, the pair’s price threw lower highs with which it began to give bearish signals. Additionally, the price closed below the 100-day SMA.

Resistance levels are 1.3950, the highest high reached during the week, and 1.3980, the highest high reached in June. Above these levels, the resistances will be 1.4030 and 1.4130. Support levels are 1.3875 and 1.3845. The first is the bottom of last week, and the second is given by the 200-day SMA.

GBP/USD Weekly Forecast – Daily Chart

GBP/USD Next Week Forecast

After resisting the good news from the United States, the pair may be expecting to see an uptrend for the following week. In any case, the price of the pair may not move away from the 1.3900 level.